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By Keith Fitz-Gerald
Many investors have been shell-shocked over the last few days as they watched the dollar continue its slide, the stock markets perpetuate their recent gyrations, and crude oil punch through the $90 a barrel level. And now industry experts are now saying the U.S. housing market won't turn around until 2009 or 2010.
Investors who see this as a time to "lay low" obviously haven't been reading Money Morning.
That's unfortunate, since those investors are missing out on the profitable suggestions we've offered in recent months that are already paying off nicely. What's more, most of these strategies also help investors better manage (reduce) risk.
But since I truly can't stand "I told you so's," let's not go there.
Let's instead concentrate on what you still can do right now to achieve bigger returns in the days, weeks and months ahead, even if the U.S. markets go to heck in the proverbial hand basket.
Here are three steps you can take right now to help your financial future stay on track – even if the U.S. markets melt down:
- First, go global or go home. I coined this phrase several years ago and it's a not-so-subtle jab at the fact that the world's financial markets are decoupling from the United States for the first time in history. The global financial markets are increasingly consumer driven – but by consumers from outside the United States. This is a dramatic departure from the days in which world's markets lived or died by the spending of U.S. consumer. But no longer. In the years ahead, the world will increasingly revolve around consumers from China, Eastern Europe and even the Middle East. This will create a bold new world when it comes to profit potential, particularly when you consider just how much weaker the dollar could get even from the historically low levels that it's trading at right now.
- Second, keep an eye out for income. As U.S. markets soften and the dollar continues to weaken (and it will), income investments will play an increasingly important role in the building of your wealth. Wall Street would have you believe that this is a new idea. It's not. In fact, it's one of the "oldest new ideas" I've ever seen. Studies show that up to 97% of total stock market returns since 1871 come from reinvested dividends. Historically, income investing meant utilities and muni bonds only. What a yawner. Now it can also mean higher-yielding investments from abroad.
- Third, befriend the global trends. It's not enough just to go global or to keep an eye on income. You've got to combine those two strategies and then also align your money with the powerful global trends of our time. We've been following those trends for months here at Money Morning. Three of my favorites are energy, tangible natural resources and defense/aerospace. By befriending these powerful global trends, you dramatically increase your odds for success.
Now all we have to do is to put these three strategies to work in the most opportunistic way possible. Here are some specific investment choices in the categories I've just mentioned:
- To capitalize on world's biggest brands and launch your own personal bull market, consider the SPDR Global Titans exchange traded fund (ETF) (DGT) or the SPDR Dividend Aristocrats ETF (SDY). Not only will you capture and capitalize on the world's biggest brands here, but you'll also have the stability of companies that are truly global in scale. Note that SDY is more selective because of its income focus and the fact that it includes the bluest of the blue chips that have raised dividends for most every one of the past 25 years.
- When it comes to China, I think you'll hard-pressed to find anything better or simpler than the iShares FTSE/Xinhua China 25 Index ETF (FXI) which replicates the FTSE/Xinhua Index or the China Regional Opportunity Fund (USCOX) from U.S. Global Investors Inc. (GROW), which casts a broader net outside China to include the economies of neighboring countries doing extensive business with China. A great strategy. [For our report on just how to play the FXI ETF, which is trading at a near-record level, please click here. The report is free of charge].
- If currencies are your thing, you could invest in the DB G10 Currency Harvest Fund (DBV), which exploits trends between the world's Top 10 currency trading pairs.
- And, when it comes to energy, I still particularly like the Canadian Royalty Trusts, as I have for years. Not only will you benefit from rising energy prices, but the best trusts like the Enerplus Resources Fund (ERF) and Canetic Resources Trust (CNE) have proven, deep reserves and are likely acquisition candidates for cash rich buyers as the Abu Dhabi / Penn West takeover recently proved. Plus, the hefty dividends you bank in the meantime won't hurt either, because a falling dollar only makes them more valuable.
The bottom line is this: The markets are soft, U.S. Federal Reserve Chairman Ben S. Bernanke is talking out of both sides of his mouth, and Wall Street is seemingly bent beyond repair from the subprime mortgage mess. But your investment returns don't have to be a mess, too.
So go global and go home – wealthy.
News and Related Story Links:
- Money Morning Investment Report:
Record Surge of China ETF Speaks to Risk and Opportunity of Chinese Market.
Hang Seng Sets Record, Leads Broad Asian Rally.
- Money Morning Interview:
China: Bubble or Bull Market?
- Money Morning News:
Minsheng Becomes First Mainland China Bank to Invest in a U.S. Bank.
- Money Morning Investment Analysis:
Here's Why MGM is a High-Profit Play on China.
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.